The truth is, most funding companies charge as much as you’ll pay.
Even though pre-settlement funding smells looks and tastes like a loan, it technically is not classified as a loan.
The reason for this classification largely relies on the fact that advances are non-recourse, which means that there is no personal obligation to repay.
As a result, most advances don’t meet the criteria for a loan, i.e. that repayment is unconditional.
Lawsuit funding companies frequently cite the fact that funding is non-recourse as reasoning for high interest rates, however, in reality, they overstate the risk.
Most lawsuit funding companies charge too much
If a funding company funded every personal injury case that came in the door, they would have to charge an arm and a leg, and they’d probably only break even.
But if you’ve been denied by funding companies before, you know they’re picky.
In general, funding companies only will fund cases with strong liability, ample insurance coverage, and quantifiable damages.
So, if lawsuit funding companies are funding cases that are extremely likely to settle, repayment is arguably unconditional.
So why do some funding companies still get away with charging over 100% per year
Because personal injury plaintiffs are often in need, they frequently rush into getting funding. Some don’t fully understand what the funding costs because contracts are unclear.
Funding companies get away with it because plaintiffs and attorneys allow it.
Your attorney will likely tell you that funding is expensive and tell you not to get funding. This is really not in a client’s best interest.
What your attorney is doing when they say this is washing their hands of the situation. All too often, the attorney will not offer an opinion on whether they think a funding contract is reasonable, leaving you in the dark.
I like my arms and legs, how do I avoid giving them to a funding company?
It’s important to do your homework so you don’t end up getting too expensive of an advance. Read up on some of the materials on Uplift’s blog before taking any contract.
Have your attorney review your funding contract. If you do not fully understand it, have them explain it to you.
If you have a contract from a competing company that you’d like a second opinion on, we’re happy to beat any contract you send our way on amount and rate.
Uplift Legal Funding
Just like the other guys, we like to fund good cases, however, we pass on the savings to you. Uplift believes in responsible lawsuit funding and is in favor of regulation in the industry.